Category: Financial

Cigarette Business Boosts ITC’s Quarter

Photo: Wirestock
ITC’s cigarette business delivered strong results in the second quarter of fiscal year 2022, with segment revenue and segment results up 29 percent and 30.1 percent year-on-year respectively
In a media statement, the company said it continues to counter illicit trade and reinforce market standing by fortifying its product portfolio through innovation, premiumization across segments and enhancing product availability backed by superior on-ground execution.
The business also continues to launch several differentiated variants to further strengthen and future-proof its product portfolio. Recent launches include Classic Connect, Gold Flake Indie Mint and Gold Flake Neo SMART Filter.
The company said it was encouraged by the stable tobacco tax environment and actions by India’s law enforcement agencies to stamp out illicit trade.
“As seen in the past, stability in taxes on cigarettes, backed by deterrent actions by enforcement agencies, enables green shoots of volume recovery for the legal cigarette industry from illicit trade, thereby engendering domestic demand for Indian tobaccos, while also mitigating loss of tax revenue to the exchequer,” ITC wrote in a statement.
The company said it continues to engage with policymakers for a framework of equitable, non-discriminatory, pragmatic, evidence-based regulations and taxation policies that balance the economic imperatives and tobacco-control objectives, while taking account of the unique tobacco consumption pattern in India, where factory-made cigarettes account for only a fraction of combustible tobacco volumes.
August 6, 2022
Altria Slashes Juul Value

Photo: steheap
Altria Group reduced the value of its investment in Juul Labs by about 70 percent, to $1.3 billion, following the Food and Drug Administration’s decision to order the e-cigarette company off the U.S. market.
The stake for which Altria paid $12.8 billion in 2018 is now valued at $450 million–below a level that allows Altria to exit a noncompete agreement and launch its own e-cigarettes. During a July 28 call with analysts and reporters, Altria said it had opted not to be released from that agreement because the arrangement was still beneficial to Altria.
On June 23, the FDA ordered Juul Labs to pull its e-cigarettes from U.S. store shelves, saying the e-cigarette manufacturer had submitted insufficient evidence that they were “appropriate for the protection of the public health.”
A federal appeals court then granted Juul Labs a emergency stay of the order to give the judges time to evaluate the merits of Juul’s appeal. The e-cigarette company separately asked the FDA to stay its own order pending the appeal.
In court filings last month, Juul said the FDA overlooked more than 6,000 pages of data the company had submitted on the aerosols that users inhale.
On July 5, the FDA temporarily halted its ban on Juul Labs products, saying there were scientific issues unique to the Juul application that warrant additional review.
The agency stressed that the stay suspends but does not rescind it the marketing denial order while the e-cigarette maker appeals the agency’s decision.
Altria’s revenue fell 4.1 percent to $12.44 billion in the first half of 2022, as consumers facing high inflation bought fewer cigarettes or switched from premium to discount brands.
Despite the challenges, Altria CEO Billy Gifford, was pleased with the results.
“Our tobacco businesses performed well in a challenging macroeconomic environment for the first half of the year,” he said in a statement. “The smokeable products segment delivered solid operating companies income growth behind the resilience of Marlboro, and our moist smokeless tobacco brands continued to drive profitability.
“Our financial plans for the year remain on track, and we reaffirm our guidance to deliver 2022 full-year adjusted diluted EPS in a range of $4.79 to $4.93.”

July 29, 2022
JT Reports ‘Robust’ Performance

Masamichi Terabatake (Photo: JT Group)
The JT Group reported net revenue of ¥1.27 trillion ($9.55 billion) for the second quarter of 2022, up 10.7 percent over that reported in the comparable 2021 quarter. Core revenue at constant exchange rates increased by 3.7 percent to ¥1. 14 trillion. Adjusted operating profit at constant currency increased by 8 percent to ¥386.7 billion.
On a reported basis, adjusted operating profit increased by 15.8 percent to ¥414.9 billion. Operating profit increased by 18.9 percent to ¥383 billion. Profit increased by 17.3 percent to ¥264.1 billion.
“In the first half, the JT Group delivered a robust performance, mainly driven by strong pricing,” said JT Group President and CEO Masamichi Terabatake in a statement. “We are also encouraged by the Ploom X volume and share performance in Japan. In the second half of the year, we will be leveraging learnings from Japan for international Ploom X launches.
“We have revised our 2022 full year reported adjusted operating profit and profit guidance upwards, driven by favorable currency movements against the Japanese yen. However, the adjusted operating profit at constant FX is revised downwards considering higher input costs impacting our supply chain operations. Dividend per share guidance for full year remains unchanged at 150 yen per share. The interim dividend is 75 yen per share.
“Regarding Russia, while we continue to manufacture and distribute our products in full compliance with national and international sanctions, the operating environment is becoming increasingly complex. Under these circumstances, the JT Group continues to evaluate various options for its Russia business, including potentially transferring its ownership, and taking necessary decisions to address the changing situation in accordance with the group’s management principle.”
July 29, 2022
Turning Point Brands’ Sales And Profits Down

Turning Point Brands (TPB) reported net sales of $102.9 million in the second quarter ended June 30, 2022, down 16.1 percent from the comparable 2021 quarter. Net sales of new-generation products declined by 45.1 percent while gross profit decreased 14.2 percent to $51.5 million. Combined net sales for Zig-Zag and Stoker’s products demonstrated comparative resilience and decreased by 0.9 percent for the quarter.
“We are pleased with the stable performance of both the Zig-Zag and Stoker’s segments during the quarter in light of a heightened inflationary environment for our customers, with rising prices at the pump impacting consumer traffic in convenience stores,” said TPB President and CEO Yavor Efremov in a statement.
“While overall sales decreased 16 percent from the previous year, Zig-Zag and Stoker’s sales were steady despite weakness in the wraps and loose leaf subsegments. Zig-Zag maintained its leading positions in both the roll-your-own paper and cigar wraps markets while Stoker’s MST experienced accelerated share gains driven by consumer trade-down to the value category.
“Despite NewGen revenue decreasing 45 percent from last year, the segment remained relatively stable from the previous quarter and profitable as we continue to monitor FDA regulatory developments. We continued to deploy a substantial amount of our free cash flow toward share repurchases during the quarter while maintaining a strong balance sheet, providing us with optionality on further capital deployment.”
“Going forward, we maintain a favorable outlook on our underlying business and our competitive positioning. However, given the market environment during the second quarter, along with continued inflationary pressures and resulting uncertainty of consumer confidence, we feel it is prudent to adjust our outlook for the year.”
July 28, 2022
Russia Exit Hits BAT Profits

Photo: BAT
BAT took a £957 million ($1.15 billion) impairment charge related to the transfer of its Russian business, lowering its half-year earnings by a quarter.
The London-based firm, which controlled almost a fourth of the Russian market, said earlier this year that it was in advanced talks with its distributor in the country to sell the business in the wake of Russia’s invasion of Ukraine.
BAT reported a 25 percent drop in profit from operations on a reported basis to £3.68 billion for the six months to June 30 as a result of the charge. The company expects global tobacco industry volume to be down about 3 percent, partly because of the Russia-Ukraine crisis.

In a press release announcing the half-year results, BAT emphasized the growth of its New Categories products and the performance of its combustible business, which continues to grow value share enabled by robust pricing.
“I am very proud that our continued New Categories growth momentum is driving faster transformation, with revenue growth of 45 percent in the first half of 2022, on top of 51 percent growth in fiscal year 2021,” said BAT CEO Jack Bowles. “I am especially proud that the number of consumers using our noncombustible brands has passed the milestone of 20 million in the first half.”
Noncombustible products now represent 14.6 percent of BAT’s revenue.
While acknowledging the geopolitical and macroeconomic challenges, Bowles was upbeat about the outlook for BAT.
“We are not immune, of course, to the increasing macroeconomic pressures, exacerbated by the conflict in Ukraine,” he said. “However, we are well positioned to navigate the current turbulent environment due to our powerful brands, operational agility and continued strong cash generation.”
July 27, 2022
PMI Reports Second Quarter Results

Photo: PMI
Philip Morris International reported net revenues of $7.83 billion in the second quarter of 2022, up 3.1 percent over that reported in the comparable quarter of 2021. Operating income was $3.06 billion, compared with $3.13 billion during the prior-year quarter. Net revenues from smoke-free products accounted for 29.9 percent of total net revenues.
PMI shipped 157.69 billion cigarettes and 24.82 billion heated tobacco units in the second quarter of 2022, up 1 percent and 1.9 percent, respectively, over the volumes shipped in the comparable 2021 period.
Given uncertainty and volatility created by the war between Russia and Ukraine, PMI also provided financial figures on a pro forma basis, which exclude the company’s operations in those markets and thus provide a more comparable view of PMI’s business performance.
On a pro-forma basis, the company’s net revenues increased by 6.2 percent between the second quarter of 2021 and the second quarter of 2022, while its operating income grew by 1.6 percent. Net revenues from smoke-free products accounted for 29.9 percent of total net revenues on a pro forma basis.
The company has suspended its manufacturing operations in Kharkiv, Ukraine, and intends to exit the Russian market. In 2021, Ukraine accounted for around 2 percent of PMI’s total cigarette and heated tobacco unit shipment volume and under 2 percent of PMI’s total net revenues. Russia made up almost 10 percent of total shipment volumes and around 6 percent of PMI net revenues.
“First and foremost, the war in Ukraine continues to deeply affect the lives of our employees and families in the region,” said PMI CEO Jacek Olczak in a statement. “My first priority is to give them the help they need and as a company we are focused on doing our utmost to support them throughout this conflict.”
“Turning to our results, our strong underlying performance continued in the second quarter, with top- and bottom-line growth exceeding our initial expectations. This reflected excellent IQOS momentum, including accelerating growth in pro forma total IQOS users and heated tobacco unit in-market sales volume, as well as favorable cigarette category trends.
“We are raising our outlook for the full year and now expect to deliver pro forma adjusted growth in net revenues of 6 percent to 8 percent, on an organic basis, and diluted earnings per share of 10 percent to 12 percent, excluding currency, underpinned by pro forma heated tobacco unit shipment volume of 90 to 92 billion units.”
July 24, 2022
Swedish Match Beat Estimates for Quarter

Swedish Match on Friday reported second-quarter operating profit just above market expectations, boosted by growth in the U.S. market.
The target of an agreed $16 billion bid by Philip Morris International Inc, Swedish Match’s operating profit rose to 2.23 billion Swedish crowns ($22.47 million) from 1.96 billion a year earlier, according to Reuters. Analysts polled by Refinitiv had on average forecast a profit of 2.19 billion crowns.
The company’s snus in Scandinavia, cigars in the U.S. and tobacco-free nicotine product ZYN, according to CEO Lars Dahlgren, had shown an “impressive volume trajectory” in terms of sales in the quarter.
Group sales increased 23 percent to 5.56 billion Swedish crowns.
Elliot Investment Management is building a stake in Swedish Match and plans to oppose the pending PMI takeover.
It’s unlikely that Elliott will succeed in building a large enough stake in Swedish Match to stop the deal on its own, according to Mads Rosendal, an analyst at Danske Bank.
July 22, 2022
Bloomberg: Juul Revenues Down Sharply

Juul Labs Inc. had its first quarter revenues plummet 23% from the prior year, according to people with knowledge of the matter, according Bloomberg.
The company received $259 million of revenue for the quarter ended March 31, said the sources, who say they saw the company’s results as it seeks financing alternatives.
“As we continue to operate in the market and go through the FDA’s review process, we are in the early stages of exploring a variety of options including various potential financing alternatives to protect our business and to address the impact of the FDA’s now stayed order so we can continue offering our products to adult consumers who have or are looking to transition away from traditional cigarettes,” a spokesperson for Juul said in a statement when asked for comment by Bloomberg.
Juul Labs had a loss of $28 million in the period, compared with earnings of $29 million for the same period a year earlier, based on unadjusted results before interest, taxes, depreciation and amortization.
In June, the FDA banned Juul products on US shelves, citing a lack of evidence demonstrating the overall safety of the company’s products, and noting Juul’s “disproportionate role in the rise in youth vaping.” Then the company won an emergency court order temporarily blocking the decision, and the agency separately stayed its order, allowing the company to keep selling products.
As of the first quarter, Juul had $323 million of cash on hand, down from $428 million at the same point last year, according to people who asked not to be identified because results are confidential for closely held Juul, according to Bloomberg.
Its debt totaled approximately $2.15 billion, including a $394 million term loan due in August 2023 and around $1.7 billion of 7 percent notes due 2025 that “payment-in-kind securities,” allowing the company to delay interest payments.
July 22, 2022
USTC Exits Bankruptcy

Photo: USTC
U.S. Tobacco Cooperative (USTC) exited bankruptcy on July 14. The announcement follows the federal Bankruptcy Court’s approval of the cooperative’s Chapter 11 plan of reorganization on June 23, 2022, along with approval of the settlement terms with the Lewis Class.
USTC filed for bankruptcy protection in July 2021 in order to meet contractual obligations to its member growers while the company addressed uncertainty presented by the ongoing Lewis class action lawsuit.
“Today’s exit from bankruptcy marks the end of more than 17 years of class action lawsuits following the termination of the federal price support program that ran from 1946 to 2005,” said USTC CEO Oscar J. House in a statement.
“Our exit allows us to now focus solely on the services and products our cooperative is known for. I want to thank our customers, employees, suppliers, board of directors and especially our member growers for their continual support throughout the bankruptcy proceedings, which are now officially behind us.”
In accordance with the plan, the cooperative pays in full its secured lenders, suppliers and unsecured creditors in addition to settlement amounts to the Lewis Class.
“We are energized,” continued House. “Our business is robust with our farmer members contracting for this fall’s harvest, customers ordering our products and shipments processing daily. With our experienced management team, dedicated employees and our strong market position, the cooperative is poised for a successful future.”
July 18, 2022
Taat Shares 2022-2023 Financial Outlook

Photo: Taat Global Alternatives
Following its recent acquisition of HLND Holdings, Taat Global Alternatives anticipates generating approximately CAD88 million ($68.31 million) in sales between June 1, 2022, and May 31, 2023.
Repeat orders of Taat, which comprised over 54 percent of the company’s gross revenue in the second quarter of 2022, are expected to continue at a steady pace as the company services its existing accounts while capturing new market share.
Anticipated revenues for the company’s fiscal year ending Oct. 31, 2022, are CAD92 million. Taat projects a loss on operations excluding non-cash items of CAD1.9 million. The company anticipates continued quarterly losses through the remainder of calendar 2022 as it invests heavily in brand-building, distribution and further development of its nationwide sales network.
To exploit its recently acquired distribution capabilities, the company plans to expand the scope of its offerings beyond Taat Original, Smooth and Menthol, with the objective of also becoming a global player in nontraditional smokable and non-smokable products.
Shifting its business model from being “product-centric” to “brand-centric,” the company expects to benefit considerably from its enhanced management capabilities between ADCO executive team members as well as the addition of 20-year global tobacco industry veteran Michael Saxon as CEO of Taat.
“In the approximately 18 months since Taat was first launched in the United States, we have established a solid foundation through strong execution of our priorities as well as continued attention to research and development,” said Taat Founder Joe Deighan in a statement. “The advanced formulation of Beyond Tobacco known as V3 has proven exceptionally popular among adult smokers and we have proactively taken steps to replace inventory of Taat made with previous iterations, thus ensuring that V3 is as widely available as possible.
“Our acquisition of ADCO provides us more than just distribution bandwidth, which is to say that we can obtain priceless feedback and various types of insights (whether qualitative or quantitative) to continuously evaluate the performance of a given product on the market and shape our business decisions accordingly to drive sell-through and long-term brand equity.
“Perhaps most exciting, we are branching out into segments that complement our core offerings, such as Taat heat-not-burn as well as a zero-hemp formulation of Beyond Tobacco that can enable us to commercialize Taat more broadly at a global level. We anticipate great outcomes in the rest of 2022 and throughout 2023 and are keen to continue with actively commercializing Taat as a better alternative to legacy tobacco products.”
July 4, 2022